Rural markets face slowdown | WilmingtonBiz

Although buyers may find lower prices for some homes in rural Southeast North Carolina than in urban areas, these housing markets face similar challenges in the current economic climate.

Jens Lutz, agent in charge of Southeast Properties Real Estate in Bladenboro, Bladen County, has been a member of the Brunswick Association of Realtors for nearly 20 years.
Lutz recently shared his views on the state of the rural housing market.

“We’ve seen a drastic slowdown in buyer activity, mainly due to increased inventories and rising interest rates,” Lutz said.

According to statistics compiled by BCAR from the NC Regional Multiple Listing Service, the September average selling price in Bladen County decreased slightly, less than 1%, from $193,967 in September 2021 to $192,488 in September 2022.

But as in larger areas, sellers sometimes have to adjust their expectations significantly.

“We are actually seeing a large amount of price cuts that I would speculate on [are resulting] from increased inventories and interest rates affecting buyers’ ability to buy and sellers’ price points,” Lutz said Nov. 8. However, that has now changed.”

Lutz said he expects such changes to persist, at least for a while.

“I foresee further falls in prices assuming interest rates stay the same or rise,” he said.

In the Wilmington area, which includes Pender, Brunswick and New Hanover counties, home sales fell 25% in September this year compared to the same month last year. But prices rose significantly in September, the latest month for which Wilmington-based Cape Fear Realtors released MLS statistics. The average selling price increased by 12.4% from $336,000 in September 2021 to $377,500 in the same month of this year.

According to a November report by the National Association of Realtors, an overwhelming majority of major city markets saw home price increases in the third quarter of 2022, despite mortgage rates hovering nearly 7% and declining sales.

“Forty-six percent of the 185 metro areas monitored saw double-digit rate increases, compared to 80 percent in the second quarter of this year,” the release said. “The national median price for existing single-family homes increased 8.6% year over year to $398,500. Year-over-year price increases slowed compared to the previous quarter’s 14.2%.”

Slowing home price growth will continue until mortgage rates stop rising, NAR chief economist Lawrence Yun said in the release. “The median income required to buy a typical home has risen to $88,300 — almost $40,000 more than before the pandemic began in 2019,” he said.

As a result, the housing affordability crisis affecting the region and the U.S. has deepened, national and local officials say.

It’s a situation that’s on the radar of nonprofits and government agencies, but there’s no easy answer.

“Over the past 40 years, home prices in southeastern North Carolina have risen 22% faster than the rest of the state. This increase is primarily being driven by New Hanover County (the second-highest in the state), where home prices have risen 5.2% annually since 2013,” according to Cape Fear Collective, a social impact nonprofit that uses data as a tool to combat it community needs.

The collective also reported that seven out of eight low-income North Carolina residents spend more than a third of their income on housing.

“Bladen County (second worst in NC) and New Hanover County (sixth worst in NC) are both in the top 10 for housing cost burdens with 19.7% and 17.7% of households experiencing cost burdens, respectively,” the website reads of the collective.

Samira Davis is a broker who also works at Southeast Properties Real Estate but sells properties throughout Southeast North Carolina, including Columbus County. She said in November she was working on creating tiny houses in Whiteville, the county seat of Columbus.

“There is an urgent need for some people, but there is a lack of affordable housing, so we need to look at how we can provide that cost-effectively for urban and rural areas,” she said.

Overall, the buyers she’s worked with recently have cash, Davis said.

“We’re seeing inventory for sale going down and the cost of capital going up,” she said, “and I think a lot of people could get caught in the crossfire when you’re looking to buy your main home and you’re buying with financing.”

Fixer-upper homes in rural areas are being sold to investors who can pay cash because credit standards for home renovations mean first-time homebuyers or those who need conventional credit will struggle to qualify, she said.

At the same time, price increases in urban counties affect their more rural counterparts.

“New Hanover County has made home ownership almost impossible for many young professionals and professionals,” Davis said. “They can’t even afford rent. I get the same call every day of the week from someone looking for something under $1,300 or $1,400 [per month] for rent in New Hanover County.”

That price point doesn’t seem to exist in New Hanover anymore, she said, and as rents and sales prices continue to rise, both renters and buyers continue to be pushed “to the fringes.”